1. 1 SELECT COMMITTEE ON FINANCE PUBLIC HEARINGS 13 FEBRUARY 2007

2. 2 INTRODUCTION Objective of this report Allocation and spending trends 2006/07 expenditure as at 31 December 2006 [Section 32 of PFMA], and related service delivery outcomes.  On Conditional Grant Spending,  On Capital Expenditure Challenges and remedial actions taken where problems were experienced.

3. 3 EXPENDITURE BY PROGRAMME AS AT 31 DECEMBER 2006

4. 4 REASONS FOR UNDERSPENDING AS AT 31 DECEMBER 2006 PROGRAMME%SpentReason(s) for underspending Administration72,9 Bursaries for 2007 academic year still to paid E-education outstanding payments Public Ordinary School73.5 Outstanding payment for Textbooks Transfer payment to section 21 schools for the first quarter Independent Schools70,6 Payment to schools are made quarterly. The next and final payment of R8million will be effected in before the end of January 2007 Special Schools74,6 Payment are made quarterly Further Education and Training 66 Transfers to FET colleges for recapitalisation. An amount of R4million is committed. Colleges offered financial management support Adult Basic Education & Training 62,4 Textbooks for ABET learners still to be paid. The amount involved is R7 million Incorrect classification of ABET educators on PERSAL.An investigation is underway Early childhood Development 61 Payments/transfer to Grade R sites are effected in January every year. Expected expenditure at year end is 99% Auxiliary & Associated Services 69 Salaries to markers are paid in December-January Expenditure on Leaner support programmes(NSNP,Orphans,Learner transport, Hostels) Own infrastructure Fund. To be spent 100% by February 2007

5. 5 SPENDING BY ECONOMIC CLASSIFICATION AS AT 31 DECEMBER 2006 Goods and Services:- low spending due to outstanding payments for LTSM. Transfers and subsidies to Prov. and Local Gov:- under spending due to termination of Regional Service Council Levy. Funds to be utilised elsewhere. Transfers and subsidies to Households:- mainly for payment of leave gratuities. Machinery and equipment:- mainly computer equipment and school furniture

6. 6 Allocation trends: Conditional Grants Conditional Grant2005/06 R’000 2006/07 R’000 % Growth 2007/08 R’000 % Growth 2008/09 R’000 % Growth 2009/10 R’000 2. HIV and Aids7,9478,4249.49,2176.39,8005.510,341 3. NSNP53,81772, 672*5.068,0237.473, 0706.978,112 4. FET Recapitalisation-30,00020.036,00045.052,200-100- 5.Provincial Infrastructure 55,91359,268102.0119,7236.3127,23639.5177,546 6. Own Infrastructure73,36076,8815.080,72523.9100,0269.9109,978 TOTAL191,037239,35731.05313,68815.51362,3323.77375,977

7. 7 Conditional Grants - spending trends

8. 8 SPENDING ON CONDITIONAL GRANTS AS AT 31 DECEMBER 2006

9. 9 CAPITAL EXPENDITURE 3 rd QUARTER 2006/07 Description Capital TransfersCapital AssetsTotal Capital Budget R'000 Spending 31 Dec 06 R'000 Budget R'000 Spending 31 Dec 06 R'000 Budget R'000 Spending 31 Dec 06 R'000 % Spent 1. Buildings and fixed structures 126,499 108, 920 41, 446 24, 663167, 945133, 583 79.54 2. Machinery & equipment - - 20, 936 11, 282 20, 936 11, 28253.89 Total 126,499 108, 92062, 382 35, 945 188,881 144, 865 76.70

10. 10 HIV AND AIDS AS AT DECEMBER 2006 Output DescriptionAllocation Spending (as at Dec 06) R’000 % Advocacy674 100 Training – Master Trainers and educators 3,1173,131100.45 Care and Support1,264 100 Peer Education1,011 100 Learning Support Materials1,4321, 32792.67 Support, Monitoring and Evaluation505506100.20 Management and Administration42123756.29 Roll-over441 Total8,8658, 15091,93

11. 11 NSNP Expenditure 3 rd Quarter 2006/07 ActivityAllocation R'000 Spending as at 31 Dec 2006 R,000 Spent % Commitment as at 31 Dec 2006 R’000 Balance R’000 Actual feeding expenditure 51, 93136, 057 69.4315, 77815, 874 Transfer payments (cooked meals) 18, 79110, 438 55.55-8, 353 Administration 2, 034198 9.733631, 836 Total 72, 75646, 693 64.1816, 14126, 063

12. 12 NSNP – Challenges and Corrective measures Newly developed standardized invoices format was discussed and agreed upon with the service providers Coordinators were advised to hold meetings with the service providers Invoices will be sent to Head Office after 5 days end of the month Monthly reports must be submitted to Head Office Implement transfer payments to all NSNP schools for honoraria and fuel (November 2006 -January 2007) Monitoring visits of 4 schools per month by Provincial Office Officials for NSNP. Ensure that outstanding payments of all service providers are processed by 10 March 2007.

13. 13 CHALLENGES ON INFRASTRUCTURE Capital (Public Works) Capital expenditure on track. Minor Capital (Education) Expenditure to date below target, but improving since majority of sites handed over. 100% commitments in February 2007 – all small renovations and maintenance. Mechanisms to expedite payments – dedicated staff. Assisting contractors’ cash flow challenges through cessions. More frequent site visits by inspectors – more regular payments.

14. 14 CONCLUSION Monitoring of and reporting on expenditure against Budgets is done through:  Monthly Executive Reports on spending against budget  Finance Committee meetings are held on monthly bases, the last meeting was held on 19 January 2007  Quarterly review for third quarter was held on the 26 January 2007  Monitoring of expenditure is done by Management Accountants per branch  Appointment of 5 additional Deputy Directors: Financial Management to strengthen the Districts financial capacity

15. 15 Education Budget-means to quality education

16. 16 THANK YOU